Pre-Owned watch specialist WatchBox has merged with venerable household jewellers Govberg, Hyde Park and Radcliffe in the USA to create a $500 million powerhouse. Will the secondary and first markets lastly align and provides collectors the very best of each worlds? Rob Corder spoke with Danny Govberg to seek out out.
WATCHPRO: We’re talking simply days after the creation of The 1916 Firm, which brings collectively WatchBox with Govberg, Radcliffe and Hyde Park Jewelers. What’s the story behind the deal and what are you hoping to realize from it?
DANNY GOVBERG, CHAIRMAN THE 1916 COMPANY: We’re making an enormous transfer to merge major and secondary. To try this, we would have liked elementary modifications.
A few yr in the past, I used to be wanting into how our companies have been considered by mates, shoppers and colleagues. Just about all people described WatchBox as the very best pre-owned platform, however no one was paying a lot consideration to Govberg as a major seller with simply a few shops.
The extra I seemed on the business, particularly when Rolex introduced its Licensed Pre-Owned Programme, it hit me that major was going to satisfy secondary. It wasn’t going to be two distinct markets. It will be one.
As I kicked that thought round, I spotted that, having completed such a very good job with WatchBox, we had not given as a lot consideration to our major enterprise.
We have been doing $300 million with WatchBox within the secondary market and solely round $100 million by means of Govberg Jewelers.
I talked to among the manufacturers, notably Rolex, and requested whether or not we might do extra with CPO in our major enterprise with them.
Luca [Bernasconi] and his group have been nice, and defined to me what their outlook was with CPO, which on the time they have been simply beginning to pilot with Bucherer.
I had been pondering for a while, even earlier than that, about whether or not WatchBox or our major retail shops would have a aggressive benefit when it got here to pre-owned Rolex in a world the place watches serviced, licensed and assured by Rolex exist.
I got here to the conclusion that major ADs promoting Licensed Pre-Owned Rolex watches would set a brand new commonplace.
“WatchBox will not be within the Rolex enterprise”
Danny Govberg
I obtained into talks with Radcliffe and Hyde Park Jewelers. We acquired Radcliffe Jewelers out of Baltimore and Delaware, after which we purchased Hyde Park Jewelers in Denver, Phoenix and Newport, California. Bringing Govberg, Hyde Park and Radcliffe collectively balances out our major and secondary market gamers.
We’ve got leveled out the scale of our new and pre-owned companies, which counterpoint one another, and have grow to be extra of a nationwide participant.
I didn’t need to be unbalanced.
Take into consideration a pyramid. On the high you could have the manufacturers: Rolex, Patek Philippe, and many others. They are going to at all times be on the high.
Subsequent within the pyramid you could have the world’s largest retailers: The Hour Glass, Seddiqi, Bucherer, Watches of Switzerland, Cortina Watch.
The underside inch of the pyramid was the place companies like WatchBox, Bob’s Watches, eBay, Chrono24, Luxurious Bazaar have been positioned.
It hasn’t mattered how we now have tried to place ourselves, we now have at all times been on the backside.
The likes of Govberg, Hyde Park and Radcliffe are all in that pyramid, however we’re simply small gamers in comparison with the large teams.
WatchPro: I can see how merging three major jewelers with WatchBox will increase your affect and place in that pyramid.
Danny Govberg: Proper. Subsequent I wanted a single new title for the enterprise. I didn’t see it working in my thoughts with all 4 firms retaining their names.
So we now have modified the title to The 1916 Firm, which is what we are going to use throughout every thing in the USA and all over the world.
The title comes from the yr my grandfather based the enterprise, so it provides us heritage.
The brand new 1916 Firm arrives with numerous heritage, and over 500 workers, however we’re going to be working like a start-up.
It could take us six months, however each retailer, lounge and web site goes to be below the identical title of The 1916 Firm.
Now, when you consider that pyramid, we can be one of many largest Rolex jewelers within the nation and an enormous participant with all the opposite manufacturers that need to work with us.
WatchBox doesn’t should be on the backside anymore, it’s a part of a serious nationwide group that brings the first and secondary market collectively in our showrooms and lounges, which can be renamed from WatchBox to The 1916 Firm.
WatchPro: How will you combine the independently-owned household jewelers into that group?
Danny Govberg: The enterprise goes to be run by John Shmerler [CEO of Radcliffe Jewelers] and Damon Gross [CEO of Hyde Park Jewelers].
We’re instantly going into the Rolex CPO programme and can launch with round 1,000 Licensed Pre-Owned Rolexes from day one.
These watches can be in Philadelphia and the previously Radcliffe shops in Baltimore. They won’t be in Hyde Park but as a result of that was the latest acquisition.
I imagine we would be the world’s largest Rolex CPO seller instantly.
WatchPro: How have you ever obtained to 1,000 watches? Has that been WatchBox stock going by means of the Rolex CPO programme and coming again to you serviced, tagged and assured by Rolex?
Danny Govberg: Sure, for months we now have been ensuring that we’re prepared with the watches going by means of the entire Rolex program.
WatchBox will not be within the Rolex enterprise.
Which means we won’t be on eBay, Chrono24 or another platform. The one place folks will be capable to purchase Rolex CPO watches can be on the Radcliffe and Govberg Jewelers web sites and of their shops.
Clients will be capable to purchase from everywhere in the world, however that enterprise will not be below the WatchBox title.
Within the months to return, we are going to pull every thing collectively into one web site for The 1916 Firm.
On the subject of WatchBox lounges, we are going to rebrand them in the USA first, after which do all of the worldwide places.
As well as, we’re going to go into jewelry in an enormous method. Hyde Park and Radcliffe are already massive in jewelry; my household has been steeped in jewelry for generations.
It took a again seat for some time, however we’re going to be rolling it out to twenty places all over the world and introduce it to our 15,000 tremendous excessive web price shoppers.
WatchPro: Do you anticipate your scale, worldwide presence and shopper base to make The 1916 Firm an much more enticing to manufacturers?
Danny Govberg: Hopefully we are going to develop much more with Rolex and another manufacturers on the first facet and get some extra Rolex doorways sooner or later.
We’re very shut with our shoppers — not simply on-line click on and purchase merchants — and we will introduce manufacturers to them. We can be a way more enticing accomplice to work with now for the manufacturers.
WatchPro: You will have described the enterprise technique, however what’s going to your shoppers expertise. What can be higher for them?
Danny Govberg: We’re going to redefine what having enjoyable with watch gathering may be. It received’t simply be prospects coming in, shopping for a Rolex and leaving. Will probably be rather more community-based like a membership.
We’re going to be one of many largest gamers in major, with round 30 manufacturers, and one of many largest in secondary.
Our shoppers can make the most of us any method they need. Purchase new or pre-owned; promote watches to us; find out about jewelry by means of us.
We’re world, so guys that know us by means of Hong Kong or Singapore can come to the States and revel in what we do right here.
On the similar time, we take Licensed Pre-Owned Rolex to the subsequent degree. We are able to actually promote the usual.
We’re opening an 8,000 sq. foot service centre that can be capable to deal with 3,000 to 4,000 watches per yr. It’s already operational, however can be absolutely as much as scale subsequent yr.
WatchPro: Is that service centre accredited with all of the manufacturers you’re employed with?
Danny Govberg: Not at first, however I imagine we are going to go in that course. For now, it’ll simply be accredited by Rolex.
WatchPro: The primary few contributors within the Rolex CPO programme have been Bucherer, Watches of Switzerland and now some family-owned Rolex jewelers are approaching board. All them have been major market specialists shifting into pre-owned. However you have already got maybe the best experience on the planet for pre-owned.
Danny Govberg: From my perspective, I at all times needed to set the best requirements within the secondary enterprise. WatchBox was the best commonplace in my view, however Bob’s Watches has its commonplace, eBay has authentication, Tourneau and Watchfinder reached for top requirements, however by definition there was not a single commonplace.
From what I see now, there is no such thing as a doubt that the Rolex commonplace is the gold commonplace that’s backed by official Rolex jewelers, and by them as a model. The shopper goes to be handled the identical method whether or not they purchase a brand new or a pre-owned watch.
WatchPro: Govberg Jewelers parted firm with Richemont in 2019, however would possibly its manufacturers be again with The 1916 Firm?
Danny Govberg: John Shmerler and Damon Gross are nice executives with respect within the business. They’re two of the very best and run high quality operations. I believe Richemont will need to work with an organization run by guys like that, however they make their very own choices.
WatchPro: You will have definitely improved your hand. Should you had a fist stuffed with eights and nines 5 years in the past, you are actually taking part in with jacks, queens, kings and perhaps even aces.
Danny Govberg: We’ve got numerous doorways, we now have 1000’s of shoppers who have a look at our movies and 1000’s of shoppers that purchase and promote with us.
We can be one of many largest Rolex jewelers within the nation, and a nationwide account with a coast-to-coast presence. We’re proper in there at quantity three, 4 or 5 in the USA after Bucherer and Watches of Switzerland Group.
WatchPro: Are you investing in upgrading and refurbishing shops as you roll out the brand new title?
Danny Govberg: A lot of the shops have already just lately been expanded and upgraded. The outdated Hyde Park showroom in Newport, CA, is reopening after a serious refurbishment.
It was completely gutted. The one in Arizona is pretty new.
Radcliffe’s location in Baltimore goes to be a 25,000 sq. foot retailer that opens in January.
The one in Delaware is model new. Our Govberg retailer in Philadelphia is principally model new and we’re transforming our different retailer within the suburbs, which can be a 7,500 sq. foot model new showroom when it opens within the third quarter subsequent yr.
WatchPro: What does this deal inform us about the way forward for retail for brand new and pre-owned watches? I don’t assume, if we had been having this dialog a yr in the past, you’d have been speaking about investing in shopping center multi-brand showrooms as the subsequent massive factor. I believed the lounge idea was the place you thought we have been heading.
Danny Govberg: The lounge idea doesn’t go away. For now, we will service folks in New York, Miami, Dubai, Singapore, Beijing, Hong Kong and Los Angeles. They’re locations the place we will deliver a worldwide collector shopper base collectively to have some enjoyable.
WatchPro: I visited your Miami and New York lounges earlier this yr. Will I see vital modifications subsequent time I’m there? Will they stick to pre-owned or might these places grow to be approved sellers for manufacturers represented by The 1916 Firm?
Danny Govberg: They received’t be approved sellers, however in the event you come into certainly one of our lounges and we aren’t capable of provide among the watches that different 1916 shops can, we will advise you to go to our lovely shops in Philadelphia, or Delaware. Our shopper advisers are there to assist.
WatchPro: WatchBox has banks of shopper advisors in what seem like buying and selling flooring in your places of work in Philadelphia, Hong Kong and elsewhere. Are they now going to be speaking to shoppers about the entire watch manufacturers that The 1916 Firm now represents?
Danny Govberg: That relies upon. We’re going to see what works greatest and what’s allowed brand-by-brand. Sure manufacturers received’t care, however others will. We’re going to abide by what manufacturers need.
WatchPro: Having a buying and selling ground providing each model that The 1916 Firm represents doesn’t appear very totally different to having a single web site providing each model and CPO alongside pre-owned.
Danny Govberg: Licensed Pre-Owned Rolex may be bought by means of ecommerce, we will discuss to shoppers on the cellphone in regards to the watches and we will store watches wherever on the planet.
WatchPro: Trying forward, what are your plans as soon as the arduous work of integrating all these companies collectively below one retail model is finished? Are you continue to in acquisition mode?
Danny Govberg: I’m in digestion mode with the retail companies. Integrating De Bethune continues to be a really massive job and I need to make certain folks admire that it is likely one of the greatest younger unbiased watchmaking firms on the planet.
WatchPro: How a lot did you’re feeling your hand was pressured to accumulate and merge the WatchBox and first retail companies. Did you end up feeling Govberg and WatchBox weren’t accurately positioned for the present and future market?
Danny Govberg: My authentic feeling, if I’m going again years, was that major was going to satisfy secondary. Why wouldn’t folks need to commerce of their watches and purchase new ones?
Why ought to collectors be restricted to solely shopping for new watches? I didn’t agree with major and secondary being separated like church and state.
When Rolex purchased Bucherer, that was the second I spotted that the most important participant within the business, which didn’t want to do that, had decided to say that major goes to satisfy secondary.
Official Rolex jewelers are going to take care of this.
We’re going to set a gold commonplace for pre-owned watches. We’re going to make prospects understand it’s fantastic to purchase a second-hand Rolex, and you will be handled the identical method as in case you are shopping for a brand new Rolex. You’re even going to get a assure from Rolex for the pre-owned watch.
I knew I needed to be a part of that, however I spotted that our enterprise was too slanted in direction of the secondary market.
I wanted to be extra balanced between major and secondary so, so long as Rolex authorised my plans, I used to be going to vary that steadiness [by merging Govberg, Hyde Park and Radcliffe Jewelers with WatchBox].
I need to develop the first enterprise and be capable to say that we’re the very best at each major and secondary.
In time, you will note the Bucherers and the Watches of Switzerlands of the world push ahead and attain the identical place with the combination of major and secondary.
We’re just a little bit totally different as a result of we now have probably the most expertise in pre-owned, and we specialize within the $25,000 to $1 million value vary.
Most guys don’t give attention to the excessive finish collectible watches. They’re extra within the $5,000 to $15,000 market.
WatchPro: Do you assume the size of the brand new 1916 enterprise will aid you safe higher allocations from the large manufacturers and smaller independents?
Danny Govberg: This places us able to distribute or spend money on any unbiased making 1,500 or fewer watches per yr. If we needed to, we might take their complete allocation, and run a CPO programme for them, on a worldwide degree.
We’re going to experiment with jewellery as properly. I’ve concepts on how jewelry and watches ought to work collectively.
WatchPro: Do you could have the bandwidth to make sure your lounges all over the world in locations like Switzerland, Hong Kong, Dubai and Singapore are given the main focus they want and stay necessary to the long run course?
Danny Govberg: They’re crucial for 2 causes. First, our shoppers want entry to us so we may help them get pleasure from their high-end watch gathering passion. Secondly, these lounges give a worldwide footprint for De Bethune.
For now, they’re 1916 lounges, but when you consider a location like New York, we now have created a house for De Bethune within the metropolis.
We are able to have De Bethune events in Singapore. We’ve got a pleasant workplace in Shanghai. We’re in the USA, Europe, Asia and the Center East.
If we inventory different unbiased watchmakers or designer jewelry, we will take these world as properly within the classiest method attainable.
WatchPro: The timing of this deal is fascinating as a result of we now have seen costs cool and air exit of the secondary market since final yr. That cooling is beginning to be seen within the major market as properly, even for the powerhouses like Rolex. It isn’t a stretch to imagine that costs for even the most popular pre-owned Rolexes will drop to under retail costs within the not-too-distant future.
Danny Govberg: Till 2008, our business was cruising alongside at 35,000 ft. We crashed right down to 2,000 ft in a matter of months with the monetary disaster. From 2008 by means of to 2019, we noticed the airplane regularly climb again to 30,000. We hit the pandemic and we dropped to 25,000 ft, however as that eased, we took off like a rocket to 60,000 ft at Mach 2. We have been not an airplane, we have been a rocket ship.
Right this moment, that plane has dropped right down to 50,000 ft. It hasn’t crashed, it has simply come down like a traditional airplane.
What you will see is 35,000, perhaps 38,000 ft within the coming yr. Then we are going to cruise at round that, and attempt to get to 40,000 ft. I don’t assume we’re dropping to 10,000 ft. That have in 2008 was a as soon as in a lifetime occasion.
In three to 4 years, major and secondary will look extra regular. A brand new watch costing $20,000 would possibly promote pre-owned for $15,000, however some watches will nonetheless value greater than retail.
We’ll see how issues develop now that the merging of major and secondary markets has formally arrived. That was not the case a number of years in the past.
Within the new order, Rolex and its ADs are setting a brand new commonplace. Should you purchase from eBay, even with its Authenticity Assure, the one commonplace it’s establishing is that the watch is real. It isn’t faux.
If a buyer is coping with a Rolex AD, watches being genuine is a given. On high, they will offer a lot extra. No person will be capable to try this to the identical degree as an AD, and sooner or later that’s going to use to many watch manufacturers.
WatchPro: There’s a squeeze on retailers from manufacturers which can be lowering the variety of doorways they’ve and more and more promoting direct to shopper. Do you assume the creation of The 1916 Firm is a protection in opposition to that pattern and improves your negotiating place with manufacturers?
Danny Govberg: That may be a good query. I have a look at the teams which have skilled life at 60,000 ft. When you find yourself up there you may get just a little giddy.
Once you come again right down to 35,000 ft, issues are going to be totally different.
Multibrand retailers might want to provide wonderful buyer expertise, have nice places, make it enjoyable, assist to take care of the secondary worth of watches, promote each pre-owned and new product successfully.
In the event that they do all these items, then they add worth to the manufacturers. If retailers are solely able to promoting sizzling merchandise in a sizzling market, then I don’t know if manufacturers want them.
WatchPro: How massive is The 1916 Firm from day one?
Danny Govberg: This yr we are going to hit turnover of $500 million. That doesn’t rely Hyde Park or Radcliffe.
WatchPro: Do you aspire to be as massive as a Bucherer or Watches of Switzerland?
Danny Govberg: I have no idea. For the subsequent 48 months, I’m going to digest what we now have. After that, I need choices.
With what we now have now, with our scale, our world attain, the manufacturers we signify, being a part of Rolex CPO and the secondary market experience we deliver, we now have choices.
If we do all of this one of the best ways we all know how, I imagine it’ll create alternatives we don’t even learn about but.
We’ve got numerous excessive web price shoppers everywhere in the world, and I need to deliver choices and option to them with the very best of major, secondary, licensed pre-owned and choices to do different issues sooner or later.
These choices won’t have been open to me if I had not gone forward with this transaction. I’ve by no means had so many choices as a result of I’ve by no means had a lot distribution.
If we will create a excessive power and skilled group below one title, and that group treats shoppers higher than they’ve ever been handled, then we can be giving all people what they need.
WatchPro: Who’re the homeowners and buyers of the brand new 1916 Firm?
Danny Govberg: It’s nonetheless me, Justin Reis, Tay Liam Wee and lots of people within the group. It’s nonetheless very closely owned by us so we aren’t below exterior strain.
Additionally it is necessary that we already make a really well being revenue, so we aren’t an organization that’s closely in debt.
